It seems as though chart-topping musicians have finally joined in on the fight against Internet radio service Pandora and their attempts to get Congress to reduce the royalty fees they are required to pay to artists whose music they stream online.
Over 100 musicians signed an open letter to Congress, condemning Pandora’s efforts to cut their royalty fees. Among those whose name is attached to the letter include stars as huge as Britney Spears, Katy Perry, Billy Joel, Rihanna, Maroon 5, Missy Elliott, Don Henley, Pink Floyd and Cee Lo Green.
‘We are big fans of Pandora,’ the letter, organised by music coalition MusicFIRST states. ‘That’s why we helped give the company a discount on rates for the past decade. Pandora is now enjoying phenomenal success as a Wall Street company. Skyrocketing growth in revenues and users. At the same time, the music community is just now beginning to gain a footing in this new digital world.’
It goes on to state that Pandora’s principle asset is music, and questions why the station would then try to persuade Congress to ‘gut the royalties that thousands of musicians rely upon.’
‘That’s not fair and that’s not how partners work together,’ it adds.
The bill Pandora is championing is the Internet Radio Fairness Act, which it describes on its website as an ‘important piece of legislation… to help end the long-standing discrimination against Internet radio.’ They argue that current law penalises new media by asking it to pay different rates to other media such as cable and satellite.
‘In 2011, Pandora paid over 50% of revenues in performance royalties, while SiriusXM paid less than 10%,’ Pandora’s statement reads. ‘We are asking for our listeners’ support to help end the discrimination against internet radio. It’s time for Congress to stop picking winners, level the playing field and establish a technology-neutral standard.’
But Pandora seems to be a lone voice among a sea of dissent in the music world. The Recording Academy has also expressed criticism of the proposed bill, arguing that it ‘claims to create fairness but fails to address the real inequity that while Internet radio services properly pay creators, terrestrial radio pays nothing… Radio broadcasters are the only business in America that can use another’s intellectual property without permission or compensation.’
Similarly, the N.A.A.C.P. has revealed their opposition to the bill.
‘Quite frankly, the I.R.F.A. bill fails the basic test of economic fairness and discriminates against singers and musicians by slashing the compensation they receive when their work is played over digital online radio,’ a letter signed by N.A.A.C.P. director Hilary O. Shelton reads.
One recent revelation that certainly isn’t helping Pandora’s cause is the Securities and Exchange Commission filings which reveal the very high salaries of its top executives.
Although the Internet Radio Fairness Coalition (IRFC) has remained largely silent on the topic, the recent response from artists spurred them to release a statement in response to the complaints.
‘We respect the artists’ concerns and are willing to work with them through the legislative process, to create a healthy, sustainable, growing Internet radio business that benefits them as well as labels, distributors and consumers,’ the statement reads.
An IFRC spokeswoman also addressed the issue, explaining that the bill is not quite what it has been made out to be by much of the music community – specifically, that it does not intend to cut royalties by 85%.
‘The Internet Radio Fairness Act does not address any exact royalty rates at all,’ she told the told The Hollywood Reporter. ‘Rather, the bill would allow the Copyright Royalty Board to evaluate internet radio royalty rates under the widely used 801(b) standard instead of the current, misleadingly-named “willing buyer, willing seller” rate evaluation standard. The IRFA bill does not request or make a recommendation as to what a future rate for internet radio would be.’
Meanwhile, Pandora’s co-founder Tim Westergren has spoken out about the benefits that the bill could provide to the music industry in general.
‘Passage of the I.R.F.A. will mean more jobs in a sustainable industry, more choices for listeners, and more opportunities and revenue for working artists and their record labels,’ Westergren said. ‘When the digital music sector is allowed to grow and innovate, everybody wins.’
While both sides of the debate continue to air their opinions, the future of the IRFA will not be clear until the end of the month, when the House Judiciary Committee is expected to consider the bill. But the argument certainly appears to be taking its toll on Pandora, with company shares dropping to a record low after the publication of MusicFIRST’s letter.
